São Joao da Boa Vista,

Dear Clients,

After extensive field survey throughout most important regions including Espirito Santo

Conillon area, we have concluded our first crop estimate for 16/17 crop.

Arabica crop recovered nicely from last two problematic years and bounced back to

41,38 Mio bags from 32.05 Mio last year. We believe we could have gone a little further

but very dry and hot days in October ( nearly entire month ) caused some losses

together with lower than normal vegetative growth due to last two years, have avoided

reaching the fullest potential. The aspect of the plantations is quite nice and healthy

On the other hand, Conillon situation is close to a disaster in Espirito Santo and Bahia.

Producers managed to save part of the crop by irrigating plantations until they could.

During our trip, with very few exceptions, we saw reservoirs with conditions to irrigate,

( most of them empty ) and government has forbidden irrigating until situation

normalizes. Contrary to Arabica, we believe that for 17/18 prospects for Conillon are

dark because plantations are fighting to preserve the fruits and the vegetative growth is

nearly zero for next crop.

Overall, from a potential of indeed 63 Mio bags we have fallen sharply mainly because

Conillon (18) where we believe the losses were at least 6 Mio bags. On Arabica (45),

losing some 3 to 4 Mio bags.

INTINERARIES COVERED ( BY REGIONS )

MOGIANA

Will enjoy a wonderful crop. A very hefty recover from last year poor crop. In our opinion

will be one of best crops since 2002.

CERRADO

A very good crop but it hasn´t reached its fullest potential. Still a lot of pruned

plantations lowering this crop but with good prospects for next year.

SOUTH OF MINAS

Very good crop overall but at the same time very irregular. Highlands, which produced

very well last year have fallen due to on / off cycle. On lower lands some areas with

excellent crop whilst others still very weak.

ZONA DA MATA

Last year was a good crop there. Production has fallen purely because of cycle and

poorer weather comparing to other Arabica regions.

CONILLON

Situation is quite difficult this year for Conillon region. Most reservoirs are empty and

producers are forbidden to use the few left ones. The loss was quite severe and also

affected the potential for crop 17/18. Most of plantations have no or very small

vegetative growth which make us believe we will face two poor crops in a row. Same

doubts Arabica crop generated last year with poor yields will be the key question for

Conillons this year. We calculated the numbers using some protection but based on

what we saw, we believe that by the time of dehusking we will have big surprises.

Therefore the risks are for an even lower crop.

Considering the statements above please have a look at our breakdown by regions:

2015/2016 2016/2017

SUL DE MINAS 12.000.000 15.700.000

CERRADO 4.500.000 6.250.000

ZONA DA MATA 6.200.000 5.880.000

SÃO PAULO 3.500.000 6.300.000

ESPIRITO SANTO 2.000.000 2.566.000

11.000.000 8.964.000

PARANA 1.200.000 1.334.000

BAHIA 1.800.000 2.400.000

1.500.000 1.080.000

RIO DE JANEIRO 150.000 150.000

30.000 30.000

RONDONIA 1.700.000 1.700.000

MATO GROSSO 400.000 400.000

GOIAS 500.000 700.000

OTHER ARABICA 200.000 100.000

OTHER CONILLON 600.000 615.000

TOTAL 47.280.000 54.169.000

ARABICA 32.050.000 41.380.000

CONILON 15.230.000 12.789.000

On Parana, Rondonia, Bahia and other small areas information was collected from our

friends / reliable sources.

With our best regards

Terra Forte – Trading Desk